AARP attorneys are representing older Washington, DC, homeowners in a lawsuit that alleges a particularly pernicious lending scam.
The lawsuit alleges that defendants Vincent Abell, Modern Management Company and its associates concocted a scam in which homeowners facing foreclosure were persuaded to transfer title to their homes. The lawsuit alleges that the defendants conspired to take advantage of the homeowners at a time when each was financially distressed and emotionally vulnerable, persuading homeowners to sign over their deeds through misrepresentations and fraud on the eve of foreclosure by misleading them into thinking that they were borrowing money to save their home. In reality, the lawsuit alleges, the paperwork represented a contract to pay at least the amount of the monthly mortgage payment as "rent" to the new owner under the term of a "lease."
The plaintiffs are all older homeowners of limited education and little financial sophistication who were approached by people after their homes fell into foreclosure proceedings. The strangers offered to help the homeowners "save" their homes and persuaded them, after increasingly aggressive approaches, to sign documents that in actuality did not create loan obligations but instead transferred title to their homes.
Take, for example, the situation of Idriis Bilaal, a 77-year-old veteran being treated for post-traumatic stress disorder dating to his service in Vietnam. Bilaal subsists on a military pension and income from the intermittent rental of rooms in his house. He inherited his house from his mother in 1973, and in subsequent years saw his equity stripped by predatory lender after predatory lender. His last mortgage was serviced by Fairbanks Capital Corp., a company recently sued by the Federal Trade Commission for unscrupulous practices.
After Fairbanks threatened him with foreclosure in December 2003, claiming arrearages of nearly $7,000 (the case was dismissed), Bilaal says he was approached by Calvin Baltimore. He says that after repeated visits to his home promising he could "make a loan to stop the foreclosure," Baltimore convinced Bilaal he could provide a "wrap around" mortgage that would refinance his mortgage loan, provide additional funds to Bilaal, and provide sufficient money to cover monthly mortgage payments. In the case, Bilaal alleges that even when he told Baltimore that he had forgotten his glasses, Baltimore assured him the paperwork was in order and persuaded him to sign documents.
After returning home, Bilaal realized the papers included several provisions that transferred tens of thousands of dollars of unexplained fees as well as "trust" accounts not adequately described or accounted. Bilaal says he called Baltimore and Baltimore offered him a complicated and misleading explanation about the implications of the paperwork. Eager to avoid foreclosure, Bilaal accepted the explanations, and it was not until later that he realized he had not absolved himself of any mortgage liability but instead merely agreed to maintain his mortgage debt to Fairbanks while transferring title to his property to Vincent Abell and agreeing to have Modern Management broker his mortgage payments. Moreover, Bilaal says that when he sought to ask Baltimore about the transaction and find out where to send his payments, he was unable to find him. Bilaal says Modern Management told him that Baltimore did not work there and could not locate him. Ultimately, Bilaal faced eviction by Fairbanks for nonpayment of his mortgage (though he had paid his debts in a timely fashion to Modern Management, which apparently did not pass them along to Fairbanks) and only narrowly avoided being thrown out on the streets.
Attorneys from AARP Foundation Litigation have joined forces with AARP's Legal Counsel for the Elderly in representing Idriis Bilaal and other homeowners in Bilaal v. Abell, which is currently in D.C. Superior Court. The lawsuit alleges violations of state and federal lending and consumer protection laws, as well as violation of tort and trust laws. Among the allegations: aggressive and misleading marketing, lack of federally required settlement statements and other paperwork, and missing notifications of borrowers' rights to rescind refinanced loans. The suit seeks to stop defendants from conducting their business practices and to force them to return title to the homeowners' homes. The lawsuit also seeks to rescind the allegedly fraudulent contracts and to impose punitive damages upon defendants.
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